When you meet Nakul and his family, you will be surprised. Behind the simple persona and modest being is a sharp and disciplined financial investor. These traits have helped him and his family to achieve a lot with their money.
I went chatting with Nakul to get him to share his experiences on money and investing. I believe you will feel hugely inspired with what he has achieved so far.
Tell us something about yourself, your career, your life, so far.
“I have spent 16 years in the corporate world working in core sectors such as automotive and aviation. After graduating in Mechanical Engineering, I worked for a few years and then went in for a MBA. I am currently pursuing a part-time Masters in Public Administration. We have 2 kids aged 5 years and 8 years. My wife worked for a consulting firm as a HR Manager until the birth of our second one. We enjoy traveling, wildlife, running and photography.”
What’s your approach towards money? When I say “money”, what feelings does it trigger?
“I consider money as a “means to an end” rather than “an end in itself”. I recognize that human needs are insatiable and keep growing as soon as a surplus is available to spend. Hence, our approach is to save first and then use the balance to spend rather than vice versa. As a couple, we believe we run our home as one team and so money is “earned” by both of us irrespective of the name on the pay check. We spend a majority of our money towards experiences rather than on material things.
Having said that, I do enjoy the finer things in life such as branded products so long as they are not exorbitantly priced. When buying material things, I evaluate both functionality and aesthetic design and am willing to pay a premium for products that are high on both. I try not to succumb to social pressure. For example: a Sony 32 inch flat screen TV fits our bedroom space appropriately, so why buy a larger one especially since we hardly watch TV anyway!”
As a couple, we believe we run our home as one team and so money is “earned” by both of us irrespective of the name on the pay check.
When did you first wake up to investing?
“I woke up to investing when I started my first job after MBA and started receiving a salary that clearly exceeded by needs at the time. This was 2004. The realization that I would need to do something meaningful with the surplus led me to start reading up on investing and ultimately led me to a professional financial management firm. At that time, I started with Mutual Fund investments of Rs 30,000 per month- all through SIPs. “
What kind of goals have you been able to achieve so far?
“What I have achieved in the last 13 years with regular investments is beyond my imagination. Some of the important goals we could fulfill include:
- Parental Home Renovation – This was by no means frugal but surely well thought. The renovation went to feature in Good Housekeeping magazine.
- International vacations – We holiday regularly.
- Home Loan prepayment – We bought our first home (sort of a dream home around a golf course) and then regularly made prepayments from the investment corpus.
- A second home – in a different city, no loans outstanding.”
Really, how did you do it? Did you work with an advisor?
“So I earn well. But that’s not enough. I understood that there is a huge gap between earning and putting the money to work. So I hired an advisor to guide me through the journey.
Given that its been 13 years since I first started, the promise of financial planners that investing for the long term in an equity-style diversified portfolio can yield ~15% year on year has stood the test of time for me!” Nakul recalls.
Surely, being an early worm has helped you get such returns. But why does one need an investment advisor?
“Having an advisor helps me bounce off ideas and have someone play as a devil’s advocate to push me to do the right thing rather than get lured by the easy path. “
So, Nakul, share some of your most important learnings with our Unovest readers.
“Sure. Over the past 13 years, I have done a few things that I would like to share.
- Salary planning, at least once a year: Every time I had a salary revision, I updated the budgeting sheet. My approach was to not save what was left over rather spend what was left after saving. This approach was underpinned by the truism that our expenses expand to fill our pockets, so we’re better off keeping our pockets (wallets) right sized! The best way to spend within your means is to not have a credit card (use debit card) or else to track all your credit card expenses rigorously (you’ll be amazed to see how quickly they add up to exceed your budgetary allocation)!
- Financial review at least and at most once a year: If you’re investing for long term goals (such as children’s education and marriage, retirement), monthly or even annual spikes in the stock market should leave you unperturbed. Having said that, do plan to sit down with your financial planner once a year (no more and no less) to validate that you have picked the right MFs and question why you can’t be saving more in the coming year than the previous year.
- Not more than 5 MF houses: Create a diversified portfolio of MFs across mid-caps, large caps, blue-chip companies but don’t spread yourself beyond 5-6 MF houses. This keeps your portfolio easily manageable within consolidated reporting from each MF house.
- Invest through SIPs: At the cost of sounding clichéd, let me repeat that SIPs are the best way to invest at least for salaried professionals. Minimal time needed for disciplined investing with no need to time the market. ‘Rupee cost averaging’ compensates for the highs and lows of the market. The proof of the pudding is in the eating – and I’m certainly eating a 15% annual return on my portfolio after having invested through monthly SIPs for the last 13 years.
- Engage a Financial Advisor: Again at the cost of sounding like an advertising billboard, let me impress that engaging a professional financial advisory firm does make a lot of sense. The temptation in today’s world is to think that one can save that bother and fees because all the advice is on the Internet. So is Wikipedia- then why enroll kids into school!? A professional financial advisor instills financial discipline apart from providing strategic guidance and tactical transactional services. Not enrolling one would be penny-wise, pound-foolish!”
Finally, which books have had the maximum impact on your life?
“I would like to mention two books.
One, Rich Dad, Poor Dad. The simple lesson I took is stop considering your asset as an asset if it takes away a dollar from your pocket rather than putting a dollar into your pocket.
Two, Total Recall, autobiography of Arnold Schwarzenegger. This book shows how incremental investments in real estate and other assets (including a Boeing 747 airplane) made him a millionaire even though he started out as a poor Austrian immigrant in the US?”
That’s a great recommendation.
Thank you for your time Nakul. I am sure many new investors will learn a lot from your experience and observations.
Wish you all the best!
What are your lessons from this Unovestor Speak? Do share your thoughts and feedback in the comments.